Buyer beware: Reimagining HR with tech purchases

Shopping for HR technology is going to be a different game in 2020 and beyond.
By: | December 24, 2019 • 5 min read

Keeping up with the dizzying array of new or updated technology products can be mind-boggling for HR decision-makers.

Yet, among the potential confusion, one thing is clear, according to experts: Purchasing HR-tech software today requires a fresh perspective, as the old ways no longer work—for a variety of reasons.

“Part of the problem we see in the market is people just are just going in and saying, ‘Let’s find a new HR system,’ but things have changed so much,” says Vinnie Mirchandani, founder of Deal Architect and a longtime thought leader on trends in software, outsourcing and offshoring, who—along with industry expert Brian Sommer—will deliver the closing keynote address at Select HR Tech, set for June 9-11 in Las Vegas. “It’s much better for HR decision-makers to look at something like recruiting, for instance, as a stream, as a process.”

Next, he says, take a hard look at the tools available today that can help completely reimagine the recruiting process.

“It’s all about the art of what’s possible; don’t just jump in and do what you did the last time,” he adds. “When it comes to reimagining HR processes—not just recruiting, but all of them—you, of course, have to factor in human skills, but you have to factor in machine skills, too.”

Cloud Delivery has Changed the Game

According to Karen Piercy, a partner at Mercer in the HR Effectiveness segment within the Talent business, as basic functionality becomes much more common across technologies, the focus during software selection and purchasing is primarily on user experience and the ability to meet specific business challenges. As a result, vendor demonstrations are becoming longer, with scripted agendas and scenarios.

“Employers are including more people in the decision-making process, and particularly in the vendor demonstrations,” Piercy says. “References are important for companies to validate what they hear from vendors but also to make connections with other organizations they can continue to contact during implementation and beyond.”

Plus, she adds, it’s no surprise that cloud technology has changed the entire landscape. Mercer, in fact, comes across practically no organizations looking to purchase non-cloud solutions, and it’s likely that very few vendors are even selling them at this point.

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“The drive to replace on-premise solutions continues full-throttle—particularly as organizations are seeing investments by vendors go to their new cloud products, rather than the on-premise versions,” Piercy says.

Above it all, the emergence of artificial intelligence/machine learning is the most exciting trend, she says, noting that Mercer has seen a spike in the past year in AI-powered HR solutions, especially in the area of career development.

“These new technologies can really help organizations provide targeted career support to employees through technology,” she says. Such technologies can act as career coaches by sourcing feedback on competencies, recommending training programs, identifying internal job opportunities, and showing career paths and potential next jobs to employees.

“This is an area where HR can say they heard the request from employees and do it in a way that is affordable and scaleable,” she says.

Mercer’s Craig Johnson, a partner in the firm’s Career Workforce Communication and Change group, adds that today’s greater focus on employee experience means decisions can’t be made in a silo—that is, without thinking about how decisions impact the employee experience, something that had not been part of the buying decision-making in the past.

“Once you have an HR-technology strategy and roadmap, sharing that with the appropriate stakeholders at the appropriate time and in the appropriate way will help you align leaders and eventually help you communicate the correct messaging to all end users,” Johnson says, adding that leadership alignment also can help HR leaders each step of the way on their technology journey—from approving budgets to championing messaging.

Lastly, training and education on using new technology helps with adoption, but he warns that HR leaders must be sure to have a plan/approach for this. For example, don’t wait until a few weeks before the technology is going live for communication and training.

“Think about your stakeholders and their specific needs and adjust/deliver communication and train in ways that align to those stakeholders,” Johnson says.

Chris Pinc, managing director of HR Software Product Management in the Talent and Rewards Business at Willis Towers Watson, says several shifts have changed focus for software and HR technology. The first is the aforementioned move from on-premise to cloud-based software.

“What you’re buying is what you see today, plus all of the likely enhancements that’ll come over the coming years,” he says. Pinc says truly understanding the roadmap for a product and release cycle is critical, including g what enhancements will be forced upon HR buyers versus what kinds they can select—and versus what kinds they are going to have to pay extra to use.

“All of that needs to be taken into consideration when buying today,” he says.

Pinc says another new focus is the shift away from solely relying on desktop capabilities to mobile, particularly for employee-facing platforms.

“People are much more on the go,” he says. “They are growing up doing things on mobile devices, and that trend has just been accelerating.”

Pinc says he also sees a shift away from thinking about HR as the primary user to thinking about employees as the primary user, which means HR buyers have to keep employee experience at the forefront, and consider how software will impact it.

“What’s really key in buying new technology is to think about areas of the HR space where it makes more sense for employees to be doing things on their own versus where it still makes sense for HR to play a role,” he says, noting the broader impact of disintermediation happening today across the economy.

“It’s called taking out the middle man, and HR is not immune to that,” he says, comparing this trend to people who book their own travel or make a dinner reservation using technology, without having to ask someone else to do it.

Move Back to Best-of-Breed?

Pinc predicts that the trend for the next five years, at least, is a move back to a system for core HR capabilities, with more of a focus on best-of-breed capabilities for strategic pieces. He notes many core HR-system vendors are trying to do too much, expanding very broadly. Integrated talent-management/HR suites have consistently wrestled with how much to expand in recent years, in terms of how much ground to cover. At some point, Pinc says, they start to get perhaps too big, rendering their offerings not robust enough and prompting HR to pull back and refocus on best-of-breed choices.

“It has been a real big movement in the past couple of years towards best-of-breed capabilities to supplement core HR systems,” he says.

“It’s still really the early days, honestly,” Pinc adds. He still sees many organizations trying to consolidate down to a single core HR system and then move to the cloud, or move off of outdated performance- and compensation-management processes.

“There’s a lot of work that’s still happening in Excel spreadsheets that really should be done through compensation planning or compensation-analysis functionality,” Pinc says. “That’s going to change, but it will take time.”

Getting the Most Value for the Dollar

Mirchandani says that, while HR should be leading on the topic of HR technology, too often many HR decision-makers aren’t dealing with future tech challenges, especially when it comes to return on investment.

“You’d think HR would be all over it saying, ‘OK, how is every one of my employees’ jobs going to change?’ But many of them are not thinking about it, honestly,” he says. “They’re reacting to things more than proactively managing things.”

Mirchandani cites the HR-tech procurement process as an area that will continue to change, and notes HR leaders have a great chance to step up and ensure they are getting the most for their investments. For example, the systems integrator process has changed quite a bit due to the software as a service world. As such, HR buyers are not so much concerned about software hosting or application management; rather, they are mainly looking at the implementation aspect of buying new software.

“With that, rethinking the procurement process must be factored into buying decisions,” he says. “There are now websites that are scoring systems integrators, something that wasn’t available in the last go-around.”

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That tougher scrutiny is forcing every systems integrator to certify its consultants and costs. HR leaders must take advantage and make smarter, more efficient decisions, he says.

“It’s a different set of checks and balances on the systems integrators that we didn’t have the last time major buying decisions were being made,” he says. “Now, the buying audience needs to know, ‘Hey, the market is completely different now.’ ”

With the continuing trend to SaaS delivery, he explains, buyers should hopefully pay less with higher project-success rates. After all, HR buyers no longer need to worry about disruptive upgrade hassles every couple of years because the SaaS process can more easily and smoothly do two to three releases/upgrades annually.

“You’ve got to plan for those and decide what features to adopt in each release,” he says. “So, there’s a new type of burden, but it’s nothing compared to how difficult the upgrades used to be.” Mirchandani, in fact, once called the old HR-software upgrade process as risky as “refueling in mid-air” because shutting down a business for upgrades could go seriously wrong.

HR-tech buyers today, he says, should look at what they spent on their internal staff and integrators on the last wave and see how they can maximize their ROI.

“Unfortunately, I don’t see too many companies asking, ‘Why am I paying the same amount again?’ Or, ‘Why am I paying even more now?’ ” he says, adding that HR should dictate the terms and expect to see some efficiencies over the course of a five-year contract.

“I don’t think HR buyers have been demanding enough in terms of the payback from SaaS. Clearly, they benefited from it, but I don’t see the dollar value showing up yet,” Mirchandani says. “That needs to change as we move into this new world of HR-technology shopping.”

(Note: Vinnie Mirchandani will team with HR-tech industry expert Brian Sommer, founder and president of TechVentive, to deliver the closing keynote address, “Don’t Let the Past Dictate Your HR Tech Future,” at Select HR Tech. The new conference from the creators of Human Resource Executive® and the HR Technology Conference & Exposition® debuts June 9-11 in Las Vegas.)

Tom Starner is a freelance writer based in Philadelphia who has been covering the human resource space and all of its component processes for over two decades. He can be reached at hreletters@lrp.com.